Bill Richardson withdraws as Obama Cabinet pick

WASHINGTON - President-elect Barack Obama suffered the first blow to his Cabinet on Sunday as New Mexico Gov. Bill Richardson, commerce secretary-designate, withdrew from consideration amid a federal investigation into how one of his political donors won a lucrative state contract.

The withdrawal deprives the incoming Obama administration of its most prominent Hispanic member. It also creates a new disruption for a presidential transition that started smoothly but lost some momentum following the arrest of the president-elect's home-state governor on federal corruption charges.

Richardson, a former presidential candidate and Clinton administration Cabinet member, said in a statement Sunday that he was withdrawing because "a pending investigation" would have "forced an untenable delay in the confirmation process." Richardson, who intends to remain as governor of New Mexico, said the investigation "promises to extend for several weeks or, perhaps, even months."

Obama, en route to Washington for pre-inaugural meetings, said in a statement that he accepted Richardson's withdrawal "with deep regret."

"It is a measure of his willingness to put the nation first that he has removed himself as a candidate for the Cabinet in order to avoid any delay in filling this important economic post at this critical time," Obama said.

A federal grand jury in Albuquerque has been investigating potential connections between a $1.5 million bond consulting contract that New Mexico awarded to Beverly Hills, Calif.-based CDR Financial Products and more than $100,000 in contributions which the company and its president made to political organizations affiliated with Richardson.

The probe is part of a national investigation of "pay-to-play" practices in the municipal bond market, in which financial companies make political donations in order to be considered for public business.

Richardson said Sunday that he had "acted properly in all matters and that this investigation will bear out that fact."

James Pfiffner, a public policy professor at George Mason University in Fairfax, Va., and author of a book on presidential transitions, said the withdrawal suggests flaws in the vetting process.

"It shows that they didn't quite do enough vetting, and something came up that they didn't quite foresee," Pfiffner said.

Obama's press secretary, Robert Gibbs, speaking to reporters on Obama's flight to Washington, defended the incoming administration's screening of its Cabinet choices. "The totality of our picks, it's impressive, and I think our vettors have done a good job," Gibbs said.

The federal investigation into Richardson's relationship with CDR Financial Products has been public knowledge for months, first disclosed in August by the Albuquerque Journal.

The Associated Press reported in 2004 that a political committee which Richardson established to pay costs for himself and his staff at the 2004 Democratic National Convention received more than two-thirds of its contributions from companies doing bond business with the state.

CDR was the largest donor to the group, "Si Se Puede! (Yes We Can) Boston 2004," with a $75,000 contribution. Other state contractors gave at least $55,000.

The reason for the timing of Richardson's withdrawal was unclear. A transition official who declined to be identified said Richardson informed Obama on Friday that he wished to withdraw after the governor concluded that the investigation would last at least another six to eight weeks.

Los Angeles Times reporter Dawn Chmielewski contributed to this report.

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